Thursday, January 7, 2010

MSNBC is reporting that Netflix has agreed to Warner Brother's demands that they hold off renting WB movies for 30 days after the DVDs release in hopes that it will drive up DVD sales. This comes a month or so after we heard that studios were negotiating just such a deal with Netflix. This news is the first definite confirmation that a deal has been struck. This also comes on the heels of rumors that the publishing industry is considering a similar strategy with ebooks to try and drive up sales of hardbacks.

There are several things wrong with this strategy and I'm pretty much mad as hell about it all the way around. First off, both industries are misunderstanding their consumers if they truly believe that this is going to work. On the movie side, despite the fact that instant gratification is ingrained in the American culture, I can't see too many people deciding to buy a movie unseen simply because they don't want to wait 30 days to get it from Netflix. If a consumer saw the movie in the theater and still doesn't want to buy it, I doubt they're unwilling to wait 30 days either. They may sell a few more dvds, but I wonder if it will even offset the money they lose when Netflix doesn't buy as many of their DVDs since the demand isn't as high for a movie that's been out for a month already.

The publishing industry is even more idiotic than the movie industry. Ebook readers are owners of e-readers because they consume a larger number of books than the average person. They're looking to get more books for their dollar and to save space in their houses because they read so much. They're also generally concerned about saving paper. Would any of these things indicate that the owner of a e-reader would go out and buy a hardback (for more money than they will eventually pay for the ebook) instead of waiting a month or two to get it on their Kindle or Nook?

Both of these strategies are going to drive up piracy. If someone can't get a movie from Netflix, they'll pirate it and watch it for free instead of spending $20 (or more!) on a DVD they don't know if they'll like (even non tech savvy people know a guy/gal who can get these things for them in this era). If the movie industry is lucky, they might still buy the DVD after that, but its certainly not guaranteed. If someone can't get an ebook on the actual release date of the book, there are plenty of sites out there for them to pirate it. Again, the industry would be extremely lucky (even luckier than the movie industry, since at least there are usually some advantages to owning the DVD over a pirated file) if that consumer then decided to legally buy the ebook whenever the publisher decided to put it out.

These are especially bad moves in a recession economy. When people are losing their jobs left and right, Netflix is, in my opinion, a lot of bang for your buck. You get lots of movies for not a lot of money. E-readers too, even though they require a significant investment upfront. Like the music industry did (kicking and screaming), they need to embrace the new consumer and find a way to capitalize instead of clinging to the business models that are obviously not working.

I wish I had some easy solutions for the growing pains of these two industries, but I do have some advice: Put out better books and movies. Movies so good that I'll pay $10 to see them in the theater. And so good that I'll go buy the DVD without a Netflix scheme. And for gods sake, make it available on Netflix right away, cause one thing that I and others do is to rent a movie then go buy it because I liked it. Same to the publishers, put out books so good that I want to buy every book that author writes. And if you can't do that in a capitalist society, then survival of the fittest demands that you get what you deserve.